Marketing Strategies for Competitive Advantage

Marketing Strategies for Competitive Advantage

To be successful, the company must do a better job than its competitors of satis­ fying target consumers. Chapter 11 shows how this increasingly depends upon establishing relationships with customers and other participants in the value chain by providing them with quality, value and service. Recently there has been

a major shift from marketing as a single transaction between supplier and buyer ro establishing a longer­term relationship with customers through loyalty schemes and data­based marketing. These recognize that it is far more expensive to obtain customers than to retain them.

Providing excellent value and customer service is a necessary but not suffi­ cient means of succeeding in the marketplace. Besides embracing the needs of consumers, marketing strategies must build an advantage over the competition. The company must consider its size and industry position, then decide how to position itself to gain the strongest possible competitive advantage. Chapter 12 explains how to do this.

The design of competitive marketing strategies begins with competitor analysis. The company constantly compares the value and customer satisfaction delivered by its products, prices, channels and promotion with those of its close competi­

market leader tors. In this way it can discern areas of potential advantage and disadvantage. The

The firm in an industry company must formally or informally monitor the competitive environment to

'with the largest marker answer these and other important questions: Who are our competitors? What are

share; it usually leads their objectives and strategies? What are their strengths and weaknesses? How

other firms in price will they react to different competitive strategies we might use? changes, new product Which competitive marketing strategy a company adopts depends on its industry introductions, distribution coverage

position. A firm that dominates a market can adopt one or more of several market and promotion leader strategies. Well­known leaders include Chanel (fragrances), Coca­Cola

Spending. (soft drinks), McDonald's (fast food), Komatsu (large construction equipment),

Kodak (photographic film), Lego (construction toys) and Boeing (civil aircraft). market challenger Market challengers are runner­up companies that aggressively attack

A runner­up firm in an competitors to get more market share. For example, Pepsi challenges Coke and

industry that infighting Airbus challenges Boeing. The challenger might attack the market leader, other

hard to increase its firms of its own sixe, or smaller local and regional competitors. Home runner­up

market share. firms will choose to follow rather than challenge the market leader. Firms using

market follower strategies seek stable market shares and profit by following

market follower

competitors' product offers, prices and marketing programmes. 14 Smaller firms in

A ­ntnner­upfirni in an

a market, or even larger firms that lack established positions, often adopt market industry that wants to nicher strategies. They specialize in serving market niches that large competitors hold its share without rocking the boat

overlook or ignore. Market nichers avoid direct confrontations with the big companies by specializing along market, customer, product or marketing­mix

market metier lines. Through clever niching, low­share firms in an industry can be as profitable

A firm in an industry as their large competitors.

that serves small segments that the other

firms overlook or ignore.

Developing the Marketing Mix

marketing mix Once the company has chosen its overall competitive marketing strategy, it is

The set of controllable ready to begin planning the details of the marketing mix. The marketing mix is

tactic­id marketing tools one of the dominant ideas in modern marketing. We define marketing mix as the

­ product, price, place set of controllable tactical marketing tools that the firm blends to produce the

and promotion ­ that tliv response it wants in the target market. The marketing mix consists of everything firm blends to produce the response it wants in

the firm can do to influence the demand for its product. The many possibilities che target market. gather into four groups of variables known as the 'four Ps'; product, price, place

110 • Chapter 3 Strategic Marketing Planning

Figure 3.7

The four Ps: the marketing mix

product and promotion. 15 These are the subject of the second part of this hook, Chapters Anything that can be

13­22. Figure 3.7 shows the particular marketing tools under each P. offered to a market for

Product means the totality of 'goods and services' that the company offers the attention, acquisition,

use or consumption thai target market. The Honda Civic 'product' is nuts, bolts, spark plugs, pistons, head­

might satisfy a want or lights and many other parts. Honda offers several Civic styles and dozens of

need. It includes optional features. The car comes fnlly serviced, with a comprehensive warranty physical objects,

and financing that is as much a part of the product as the exhaust pipe. .seroic­es, persons,

Increasingly, the most profitable part of the business for car companies is the loan plnccn, organizations

that they offer to car buyers.

and ideas. Price is what customers pay to get the product. Honda suggests retail prices that its dealers might charge for each car, but dealers rarely charge the full asking price

price. Instead, they negotiate the price with each customer. They offer discounts, The amount of money

trade­in allowances and credit terms to adjust for the current competitive situa­ charged for a product or

tion and to bring the price into line with the buyer's perception of the car's value. service, or the sum of the

Place includes company activities that make the product available to target values thai consumers

exchange for the benefits consumers. Honda maintains a body of independently owned dealerships that sell

of having or using the the company's cars. They select dealers carefully and support them strongly. The

product or service. main dealers keep a stock of Hondas, demonstrate them to potential buyers, nego­ tiate prices, close sales, arrange finance, and service the cars after the saie.

place Promotion means activities that communicate the merits of the product and All the company

persuade target customers to buy it. Honda spends millions on advertising each activities chut make the

year to tell consumers about the company and its products. Dealership sales­ product or service

people assist potential buyers and persuade them that a Honda is the car for available to target

them. Honda and its dealers offer special promotions ­ sales, cash rebates, low customers.

financing rates ­ as added purchase incentives.

An effective marketing programme blends the marketing mix elements into a promotion

co­ordinated programme designed to achieve the company's marketing objec­ Activities tl\at

tives. The marketing mix constitutes the company's tactical tool kit for estab­ communicate the

product or service and lishing strong positioning in target markets. However, note that the four Ps

its 'merits to target represent the sellers' view of the marketing tools available for influencing" buyers.

customers and persuade From a consumer viewpoint, each marketing tool must deliver a customer benefit.

them to buy. One marketing expert suggests that companies should view the four Ps as the

customer's four Cs: 10

The Marketing Plan • 111

FOUK Ps

FOUR Gs

Product

Customer needs and wants

Price

Cost to the eustomer

Place

G onve me nee

Promotion

Communication

Winning companies are those that meet customer needs economically and conve­ niently and with effective communication.